Why All Our Games Are Now Cheaper Forever

Spiderweb Software just started our annual sale. It's ten percent off everything we sell for the whole month of October. That isn't really news. We do this every year, and people seem to like it.

But this year, there is much more. We permanently lowered the prices of everything we sell. At least 20% cheaper (in addition to the 10% for the sale). For some products, much more. The most expensive game we sell is now $20, and that is likely to last pretty much forever.

It's a big mental shift for us, and I thought it was worth blogging about. I write about game pricing on this blog a lot, and I'm not ashamed of it. Right now, most of the huge revolutions in the game biz are in the new crazy pricing models, and there are still a lot of questions out there about the most efficient way to make a game make money.

Why It Took So Long To Lower Our Prices

We released our first game in January, 1995. That is a long time ago, and much has changed. A few helpful comparisons.

Now: Huge distributors like Steam and iTunes sell massive numbers of copies for low prices, and Indie developers make good money on huge volume.
Then: The World Wide Web barely existed and we scraped by on a handful of sales from AOL.

Now: A quality Indie niche game sells on big portals for ten bucks at most. More than that and people think you're crazy and move on.
Then: Most good shareware games sold for $25. It took me a very long time just to realize that that price isn't normal anymore.

Now: Indie developers can make excellent livings selling lots of copies of cheap games.
Then: Indie game developers were called "shareware developers," and everyone thought they were losers and spat on them.

Now: Want to pirate a game? It just takes 3 seconds of searching on Pirate Bay.
Then: Took five minutes of searching instead of three seconds. This actually made a big difference.

Now: Many new games are given away for free and make their money on micro-transactions from a portion of their users.
Then: FREE games? With micro-WHAT? What are you? A SORCEROR?

(The shift to free games is arguably the most stunning development in the games biz in a very long time. My prediction: Within five years, there will be a successful game that pays you a small amount to play it and makes their cash selling better swords or whatever.)

I'm a dumb person in plenty of key ways, so it took me a while to observe the key fact:

A LOT of money is being made by selling games for cheap.

So now , instead of selling our games for $25 or $28 (!!!), we'll sell them for $20 or $15. I know this still seems like a lot, but I haven't backed off on the key thing I've long said ...

People Who Write Niche Games Can't Charge a Dollar

If you're making a pretty, shiny, highly casual game with cartoon squirrels and you think you can find a million fans for it, go ahead. Charge a dollar. You'll have to.

But if you write games like mine? Low budget, old school, hardcore RPGs with lots of content? If I charged a dollar for it, I'd have to sell a copy to pretty much every interested human everywhere to have a chance of making money.

So I still charge an actual price, an amount of money that still feels like money. Maybe I should have taken everything down to $15. Maybe I'm being too timid in the price drop. But, in a sense, that difference doesn't matter.

There are two sorts of prices you can pay for a game: An amount that is so small you don't care, and an amount high enough that you do. Our newest game, Avadon: The Black Fortress, is $20 on our site and $10 on Steam. That's a big difference, but, in a very real sense, they have the same price: an amount of money that actually feels like spending money. We will always charge actual money, as opposed to pocket change. All I have done is slightly tinkered with the level.

Bonus Point: Why Is Our Game Twice the Price On Our Site Than On Steam

I get asked this a lot, and it's a fair question. The answer:

In any place where your game is sold, pick the price that will maximize the profits. This ideal price changes depending on the nature of the place where it is being sold.

Steam is a big, sprawling gaming bazaar where practically all of the games are cheap. People see a game, spend a moderate amount of money on it, and try it out. People experiment there, and you need to charge a price that encourages customers to pick you as their experiment. Also, if you charge $20 for your game there, it will be on a list with ten good games at half the price, so you will get murdered.

Spiderweb Software's web site, on the other hand, only lists our games. It is generally only visited by fans of role-playing games. People on our site are generally really interested in the specific sorts of games we sell, and so the higher price doesn't scare them off.

This sort of logic isn't my weird invention. It's basic business. World of Goo is $20 on the company site, $10 on Steam, and $5 on iTunes. Each marketplace has its own norms, and you price your game to maximize your earnings there.

And that is why games are now at most $20 on our site. Because of the current standards of the game industry as a whole, I think that will most likely increase our earnings overall. It might not always have been that way, but I feel it is now.

(And, yes. I set game prices to maximize my earnings. Of course I do. Astonishingly, some people seem to take offense at this. I don't care. I'm not going to neglect to send my kids to college just so I can satisfy someone's arbitrary standards of Indie cred. I'm too old for that, and children persist in their irritating need to eat food.)

So. Anyway. A Sale.

Our games are cheaper forever, and even cheaper than that this month. We're getting a lot more sales, and I don't feel like the dumb jerk that still charges $28 for three year old games anymore. If you like old school role-playing games, you could certainly do worse.

And it will be a while before I write about pricing again. Believe it or not, I have other things to say (and make fun of). Time to get going on that ...

World of Goo's Big Sale

2D Boy put their awesome indie hit World of Goo on sale. They charged whatever people wanted to pay. Then they put the results up on their blog. The sale got a ton of PR. They sold a lot of copies. A top of copies sold for the minimum: a penny. The vast majority went for $1.99 or less. A bunch more went for $4.99. Very few paid for more than that.

This was pretty cool, but I've seen a lot of people making conclusions based on these results that I don't think are justified. Like, say, that Indie games are too expensive. Which I feel is the opposite of true.

And what can we conclude about this? Well, if you have a really popular and good game that's been out for a while, you can goose sales a lot by having a big sale. Of course. (My company is taking advantage of this basic truth by having a big sale right now.)

But that is the only thing you can conclude.

Some people have suggested that these results are proof that Indie games are too expensive and that these results show that games should be five bucks. Or cheaper. Do not believe this! You can't make a living in the long term selling your game for $4.99. When the PR boost fades away, you will find yourself making no money. Don't price your games based on what the customer wants to pay. He or she does not have your best interests at heart.

On the other hand, the huge number of people buying the game for a penny might make you think a lot of people are horrible cheapskates. But 2D Boy put up a poll to figure out why people paid what they did. A lot of buyers had already bought the game on one platform and just wanted it for another. And, in this case, yeah, I can see paying a penny. When someone buys one of our games for the Mac, we give the Windows version for free (and vice versa).

So the only real moral of the story is that people like sales. Not a shock. And World of Goo is still worth buying at the regular price.

Some Morbid Reading For Your Day

As the years passed, I have seen a lot of Indie developers rocket past me, just because they are more talented and courageous than I am. Stupid Braid and World of Goo, getting all big and famous by earning it.

I have spent a lot of time envying Introversion, for getting success by being so damn innovative and good. Which is why this article about the grim state of their business really bummed out my day.

We all say it again and again, but it bears repeated. Indie development is a rough way to make a living. One or two missteps can cast you into the Abyss. Not long ago, I released two unpopular games and almost went under. Only the good fortune of writing one big success saved me.

I will feel bad if any currently operating Indie, even a direct competitor, goes under. Because, to quote an excellent book, "A marketplace without a competitor isn't." We compete, but we're all in this together. When one of us does well and gets people to go, "Hey, I should look for more games like that," it helps us all. Anyone who gets introduced to RPGs by Eschalon is just waiting to become my customer.

So good luck to Introvision. Survive and keep showing that Indie gaming can be more exciting than just 90s-style RPG retreads.

Indie Games Should Cost More, Pt. 2, The Expensening!

Last week, I wrote about how Indie games are becoming too cheap and what factors we should use to price our games in the future. This post attracted some attention and the occasional explosions of misplaced rage. A quick summary of the article:

• There are an increasing number of Indie game outlets where low, low prices are expected or enforced.
• Not all Indie games, for a variety of reasons, can profitably be sold for so little.
• Thus, the new markets are going to choke what Indie games can accomplish, not encourage it.

This isn't good for anyone. Developers. Customers. Distributors. Anyone.

This week, I talk about the reasons I've been given to make my games cheaper, why I ignore them, and what I think should happen now.

One Quick Point

Some people on forums criticized what I wrote because they mistakenly thought I was trying to repeal the law of Supply and Demand. This is unbelievable nonsense. I LIKE the idea of pricing according to Supply and Demand. It is our outlets to the marketplace setting arbitrary price caps that is countering the good work of economics, not me.

Refuting nonsense on Internet forums is such a Sisyphean task that I hate spending even a moment at it. But this particular misrepresentation was so common that I had to say something.

Why Do You Charge So Much? You Suck!

In the last fifteen years, I have heard just about every reason why my games should be cheaper. These arguments refute infallibly the old maxim that "The customer is always right." I prefer the much more accurate "You can't win an argument with a customer." Which is why complaints about my prices tend to go unanswered. So, without further ado, here is the litany of shame ...

"Your Games Are Too Crude and Old-School To Justify the Price"

Then dude, seriously, don't buy them. (And, if I may ask, why are you playing them?) I have my pride. If you don't think my games are worth it, don't give me money.

But consider this. I write plot-heavy old-school, turn-based RPGs. Almost nobody else does. I provide a quality niche service few others provide. Some people LIKE the crude, old-school thing I got going on. The scarcity of the service I provide justifies the price.

"If You Charged Less, You Would Sell More Copies"

This is true. The problem is that I won't sell enough more to justify the lower prices.

Microeconomics tells us that as we charge less, we sell more, but we make less per sale. At some point, there is a best price, a point where (number of sales) * (profit per sale) is at its maximum. The question is, where is it? Based on my experiences shifting prices up and down, I think I'm actually at the sweet spot.

Suppose I charged a World Of Goo price, like $15. This would roughly halve my profit per sale. (Because of the way credit card fees work, the less I charge per sale, the smaller percentage of profits I make.) To make up for this cut, I would have to double my sales. Double! That is a huge increase! Doubling would be big!

Based on data I've received from distributors, I believe that about 3% of my downloads turn into sales (this is called the Conversion Rate). To make up for the price cut, I would have to increase my conversion rate to 6%. This is a HUGE rate, pretty much impossible to get for a niche product like mine. If I had a more casual-friendly product, I might manage it, but that's not my niche. I have to set a price to reflect the nature of my niche.

"Steam Cut Their Prices Way Back, and Their Sales Went Up"

True. But their brief sale got a lot of press. There is no reason to believe this would result in an increase of profits over the long run, for the reasons given above.

We have sales too. They got attention and an uptick in sales. Then that increase petered out and sales returned pretty quickly to the old levels (but with less profit per sale). If sales had stayed high, we would probably have lowered prices permanently by now, but that's not how it worked out.

"I Can Buy Better Old Games At the Game Store For Far Less"

This is, honestly, a pretty hard charge to answer. When someone says, "Why should I get your game when I can get Baldur's Gate 2 for $10?" what I think is, "Dude, you haven't played Baldur's Gate 2 yet? Go get it! It's awesome! And you know something? In a few weeks, when you're done with it, I'll still be here."

I can't compete on price with old classic. Nobody can. To expect me (or anyone) to match price with a handful of old games is completely ridiculous. Can't happen.

But my games have an advantage. They're new. Go ahead and play the old classics, or at least the ones you haven't played already. Go play Fallout or Planescape: Torment. They're SWEET.

You'll be done soon enough. And, when you are, I'll still be here.

"I Can Play Games Just Like Yours For Free on Kongregate Or Whatever"

No. You can't. I make sure to write games that aren't already being done by everyone else. That's why I can charge so much for them. And, prospective Indie developers, if there is a similar version of the game you're writing already available for free, write a different game.

"You Don't Deserve That Much Money. Period."

Then don't pay. The day nobody thinks my games are worth the price, I will fold up shop and go get a real job. But I will never, ever be shamed into charging less than what I feel is a fair price for my labor. I work hard, and I have earned a living. The service I provide to my fans is worth the ability to keep food on my family's table and a roof over their head.

If you disagree, that is your right. But I am not going to send everything I've built over a cliff to appease your wrongness.

What Should Be Done

After all this griping and ranting, I should offer some actual suggestions for what should happen in the future. You shouldn't complain without suggesting a better alternative, amirite?

If all of us (developers, customers, distributors) want a healthy Indie scene in which we can all make money, we should all want the people who make the content to be able to make a living. If you agree, there are things each of us can do to help this happen.

Customers - Don't pirate Indie games. Sure, it's wrong to pirate any game, but not all crimes are equal. But when the game is the direct source of the cash that puts food on a family's table, that is an extra-intense level of Bad.

Anyone who would deny the two guys who made World of Goo their lousy fifteen bucks deserves a good, sharp kick.

Developers - Figure out the right price for your game and stick with it. Don't let anyone shame you into going lower. It stings to pass on distribution on Amazon, sure. But if you can't get the price you need to charge, swallow hard and move on. Maybe if they aren't able to sell more of the titles they want to sell, they will change to a wiser path.

Distributors - Don't set arbitrary price ceilings (like at Amazon or XBox Live Community Games). If you are setting the price yourselves, use the developers price as a guide. Then let the magic of the marketplace do its work, punishing the foolish and rewarding the smart. If a game is too expensive, the price can be lowered later. But if your overly low prices don't support the people who make the products that make you money, well, that is not in your simple, dollars-and-sense best interest. Don't cut the developer off at the knees before his or her product even reaches the market.

None of this is unreasonable. I'm not being all idealistic or hippy-dippy. I'm just using hard, simple business sense. This accelerating rush to give our products away is simple craziness.

So go ahead. Try it. Charge what you're worth. See what happens. You might as well. Because we'll all have to do it sooner or later. You might as well do it while you're still in business.